Written by Sarah Martin & Ken Kaplan of Kaplan CFO Solutions, LLC
Why reliable cash flow projections are important for any business..
One of the most important tasks of managing your business is making sure you have enough money to pay vendors and employees. Cash flow analysis and projections are the vital tasks that will help manage your cash outlays and cash inflows, making sure your business operations continue uninterrupted. Having a profitable business is great, but profit and cash are not the same.
A profitable business without cash could become insolvent. Depending on your business size and industry, weekly or even daily cash flow analysis is a must.
The best part of a cash flow projection may be the scariest part. Why? Because it gives an early warning sign and enables the business to make critical changes to ward off the impending shortfall. While working with a solar development company recently, the weekly cash flow report we used was far more important than the monthly financial statements that we generated, because the cash flow report told us what was going to happen. Compare that to the monthly financial statement, which was a summary of what had already happened.
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